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No Clear Guidance with Supreme Court’s Disparate Impact Decision

Apartment Industry Colleagues,

After much anticipation, speculation and contemplation of the potential ruination of the apartment nation…the Supreme Court of the United States (SCOTUS) finally released its decision on Texas Department of Housing and Community Development v. The Inclusive Communities Project, Inc. For those unfamiliar with the name, this is the case that answers the question of whether the Federal Fair Housing Act supports the concept of disparate impact in housing discrimination cases. In other words, can someone be liable without intent to discriminate. The answer, by a vote of 5 to 4, is yes…with some caveats and provisos.

The majority opinion, authored by Justice Kennedy on behalf of Justices Sotomayor, Ginsberg, Kagan and Breyer, would not be considered a ringing endorsement of disparate impact. In fact, Harry Kelly, Esq., an attorney with the firm of Nixon Peabody in Washington, D.C., and the lawyer who crafted the amicus brief on this case to which NAA and several other organizations put their names, put it this way in his recent article on the decision. “Having found that disparate impact liability exists under the FHAct, [Justice] Kennedy thus spent much of his decision narrowing the scope of that liability and offering a series of “safeguards” intended to prevent abuse of disparate impact theory.” These safeguards have the effect of raising the threshold which must be reached to validate a disparate impact liability claim. So, while the headline is certainly not what the apartment industry wanted to see, the fine print offers some promise.

The safeguards contained within the majority’s opinion go right to the common sense arguments about disparate impact. For example, there must be a cause and effect relationship between the policy in question and the resulting impact on a protected class. Justice Kennedy writes “…statistical disparity must fail if the plaintiff cannot point to defendant’s policy or policies causing that disparity.” Plaintiffs in disparate impact cases would also, under the majority’s opinion, need to clearly show that the policy in question raises “artificial, arbitrary and unnecessary barriers.” Harry Kelly again acknowledges that this is not new to the disparate impact debate but its emphasis in Justice Kennedy’s opinion does have the effect of raising its importance to the process.

The question in all of our minds is what does this mean for the day-to-day behavior of apartment owners and operators? How should they change their policies or procedures based on this opinion? The bad news is that there is no clear guidance in that area contained within this opinion. Justice Kennedy did establish some good rules for evaluating polices for disparate impact liability but it will ultimately be up to lower courts to do the actual evaluation when litigation come before them. That means owners and operators will continue to operate in somewhat of a murky area when it comes to their exposure to disparate impact liability. It has been suggested by some fair housing attorneys that the SCOTUS opinion does raise the value of documenting that you considered potential disparate impacts when you developed a policy and why the policy you choose was still “necessary to achieve a valid interest.” It likely will not protect you from litigation, but it could help in your efforts to respond. More to come on that.

Staying with fair housing for a moment, during its recent 2015 Education Conference and Exposition, the NAA Board of Directors passed a statement of policy on the issue of reasonable accommodation for requests for emotional support animals. This issue is trending as one of the most significant current operational challenges for apartment operators. Existing rules from the Department of Housing and Urban Development (HUD) allow for abuse by individuals who do not require an emotional support animal attempting to skirt pet restrictions in apartment communities. A working group of NAA members spent two months looking at all aspects of the issue and crafted a statement of policy that (1) reaffirms the industry’s support for those who legitimately need an emotional support animal and (2) urging HUD to amend its rules to curb such abuse. It has been encouraging to see support for this position from psychiatric and animal rights organizations and NAA will seek their support in advocating before HUD on this issue.

Finally, to update you on another case recently decided by the SCOTUS, by a 5 to 4 vote the Court upheld the Arizona Independent Redistricting Commission established by voters in that state to draw the Congressional district lines and rejected claims by the state legislature that such a move was unconstitutional. The decision in Arizona State Legislature v. Arizona Independent Redistricting Commission not only preserves the Commission and current map in Arizona, but bolsters similar commissions in other states, like California. It also strengthens arguments by reformers in states that currently allow district lines to be drawn on a partisan basis who are in favor of a commission-like process. In my view, the SCOTUS decision is a huge win for nonpartisanship and a shot across the bow of ridiculous gerrymandering that is conducted by both parties. 

To see both the article from Harry Kelly on the SCOTUS disparate impact decision and NAA’s statement of policy on emotional support animals, visit the Government Affairs section of the NAA website. Remember, nothing in this column should be considered legal advice. It is for informational purposes only.

As always, thanks for reading. Talk with you next month.